eIQ Insights: Alfacart Steps Away from Marketplace to Focus on One Vertical

Despite its reputation as the next biggest ecommerce market after China and India, Indonesia’s playground has caused many players drop out.

Alfacart, an e-marketplace offering products from various categories, is the latest name in retail that has shifted strategy in order to remain in the game.

After more than a year operating as a horizontal marketplace, Alfacart has reverted back into an ecommerce channel selling products solely from its parent company, Alfamart – Indonesia’s second biggest convenience store chain.

The pivot has not only caused the downsized in the team and C-level management to resign but as well, all third party sellers.

What happened?

Alfacart’s beginning

Alfacart was first introduced to the country as AlfaOnline and built in 2013 when Alfamart realised the importance of having an online channel to expand its reach. The platform at that time focused on selling groceries and various daily necessities.

After three years and a lack of significant growth, the company decided to open its platform to third party vendors and increase their product categories to include items under Fashion, Gadget, and Lifestyle.

“Our digital presence needed to be transformed into full-fledged ecommerce to be able to win the market and contribute significantly to the group’s revenue,” said CEO Catherine Sutjahjo at the time of the transformation.

Customers ideally could pickup and return their order at any Alfamart counter, which also widened their payments options to cash.

However, despite its efforts, Alfacart struggled to compete with the already established marketplaces. A quick look at web traffic ranks in Indonesia show that Alfacart hasn’t managed to come in the top five.

Alfacart (purple line) traffic is seen declining in the last three months

Say yes to the horizontal marketplace?

Alfacart is not a lone case in Indonesia’s saturating retail space. Only a month earlier, Cipika, a marketplace backed by Indosat Ooredoo – one of the largest telco providers in Indonesia – announced that it was shutting down its business.

Similarly to Alfacart, Cipika also evolved into a multi-category marketplace model by offering snacks and electronics in an attempt to reach more potential customers but called it quits after almost 3 years.

Cipika’s shut down announcement on their website

The company’s reason for closing down?

“B2C ecommerce will take a long time to reach profitability,” admitted Prashant Gokarn, Chief Strategy and Digital Services Officer at Indosat Ooredoo.

Say no to the marketplace.

The landscape for B2C ecommerce in Indonesia is indeed crowded and becoming more so as big corporations and conglomerates scramble to back new ventures by pumping in millions of dollars.

Indonesia’s crowded B2C space

The problem though is a lack of any distinguishing factors between these marketplaces as they all offer similar product categories, operate on the same models, and target the same people.

With the same people vying for the same slice of pie, one way to win the consumer is by offering heavy discounts — a strategy that hasn’t changed since the birth of ecommerce in the country 4-5 years ago and still yields the same little return. Another way would be to diversify.

Blibli is a good example of a B2C site offering new categories such as local Indonesian goods and travel through the acquisition of Tiket.com.

What’s important to note is that the playing field is about to get even more rough as notable C2C players like Bukalapak, Tokopedia and Shopee have also branched out to B2C by onboarding big brands like Unilever to their platforms.